If you’re planning to enter the property market, we have good and bad news for you – there are a number of options of ways to do so. You can purchase off the plan, buy an established home, build a new home, or go for an apartment unit. This is exciting and at the same time, overwhelming. As we all know, there are pros and cons that go with every decision, purchase or investment. How would you know the right fit for you?

Off the plan purchase

A lot of homebuyers and investors view buying off the plan as a smart method to enter into the property market or get their hands on their dream home. Buying off the plan means purchasing a property that hasn't yet been built or is still being built. Instead of relying on the final result, you base your purchase decision on the building plans and designs.

Pros of buying off the plan

Gives you time to save money and access to special discounts. One fantastic benefit of buying off the plan is that you'll have 1-2 years to get your finances in order. All you have to do is pay a 10% deposit up front, have your attorney review the contract, sign it, and then wait. You can start saving during that time without having to worry about making mortgage payments. Plus, the developer might give you a discount on the purchase price if you purchase early in the process, especially before work starts.

Property value increases. When you purchase off the plan, you lock in today's pricing, so you won't have to worry about inflation or skyrocketing property prices once you sign the contract. This can lead to an immediate financial gain.

Save on stamp duty concession. In general, you can anticipate paying stamp duty within three months of the contract date when buying a house (though there are exemptions for first home buyers). But for off-the-plan purchases, this is extended to 15 months following the contract date or the completion date of the home. Remember that this discount is only available to people who plan to reside in the property. The three month window will still be in effect for investors.

Cons of buying off the plan

Builder bankruptcy. You might not get your deposit refunded if the developer declares bankruptcy before finishing the project. This will rely on your contract's provisions, so be sure to iron that out before buying off the plan.

Completed home that doesn’t meet expectations. Since you can't actually see what you're buying when you buy off a plan, it's possible that you won't get what you wanted or what was promised. When developers experience financial difficulties, they frequently redesign the building to cut costs on items like finishes. There may even be construction delays along the way.

Lower property value. In most cases, your lender will only evaluate the property once construction is complete, and occasionally the value may be lower than you anticipated. This could have an impact on your loan to value ratio (LVR), which is the amount you must borrow expressed as a percentage of the property's worth as determined by your lender.

Established property

If you’re the type who wants to see the property and don’t have much time to spare waiting for a home to be constructed, buying an established property might be for you.

Pros of buying an established property

Faster process. In comparison to building a new home, purchasing an established property at an auction or through private sale is much quicker. This is because settlement times are often 30, 60, or 90 days.

Renovate to increase resale value. Renovations have the potential to increase the value of the home even though it might not be brand new. In particular, an older-style home with a modern restoration was the most desirable property that increased in value, according to Nelson Alexander director Arch Staver.

Cons of buying an established property

Additional upkeep costs. An established property, whether it’s a few years or decades old, may require maintenance costs. Although incredibly popular, period homes for example require a lot of upkeep. Maintenance fees can quickly add up.

Affordability. Due to their proximity to the city and great demand, established homes may also be more expensive.

New property

Building or buying a new home is the best choice for you if living in a house that isn't precisely as you want it to be doesn't sound ideal to you.

Pros of buying or building a new property

Design flexibility. Everything in your new home, including the top-of-the-line appliances, paint, flooring, fixtures, and more, is entirely up to you. Install a skylight if you want natural light, or have a stunning, loud backsplash to represent your uniqueness. The only constraint is your imagination.

First Home Buyers Grant. First-time home buyers may also be drawn to purchasing a freshly constructed home because, depending on the state or territory you purchase in, the First Property Owners Grant may be available if you buy a home that has never been occupied.

Cons of buying or building a new property

Takes time. The disadvantage of building a new home is that you can't move in right away because it takes time to create a new home, as you would have predicted.

Pricing changes. Additionally, the price is not set in stone when building a new home, and you might need to submit a construction loan application, which involves additional documentation.

House or unit

In general, investors who decide to buy a unit typically do so because they have a greater yield and are simpler to hold onto. Owner-occupiers, on the other hand, are more inclined to buy homes since they are bigger and make wonderful places for families to expand.

Pros of buying a unit

Affordability. Due to their lower original cost and better rental income, units are frequently more desirable to investors.

Higher yield. In general, many units are able to obtain yields of 4% to 5%, while houses in comparable places may only be able to obtain only 2%, making units a very attractive investment.

Location. Buying a unit gives an investor the chance to enter a desirable neighbourhood that might otherwise be out of reach for someone on the same budget looking just at houses.

Cons of buying unit

Space and privacy concerns. The lack of space may make an apartment unsuitable if you have a family. Compared to houses, units often have smaller overall floor spaces and smaller rooms. Unless a balcony is included, they frequently lack a separate outdoor area. Plus, being surrounded by so many people in a complex can make it noisier and less private than a home.

Strata fees. Owners of units are responsible for paying quarterly strata fees for the upkeep and repair of common spaces. These may cost $500 or even thousands per quarter. If you live in an apartment building, you must also abide by the owners' laws regarding noise, the usage of common facilities, remodelling your apartment, and other issues.

Home loan application challenges. Smaller units and studio flats are much riskier according to some banks because they are difficult to sell and lack the appeal of the purchasers. Under standard loan terms, it is typically significantly more difficult to obtain clearance for apartments smaller than 50m², while specific banks may have a different size restriction.

You decide

Whether you go for an apartment unit, purchase off the plan, or buy an existing or new home all boils down to your preferences and capabilities. Evaluate your current financial situation, lifestyle, and needs to choose the best option for you. Should you need help, reach out to friendly and expert brokers, builders and other specialists that may be of help.

Let us help you get financial solutions whatever you’re decision may be

We at Fastgrow Finance can help you get the best financial solutions for you to help you achieve your goals. We understand the market and are able to help you choose the best options for you based on your lifestyle and needs.

Please get in touch with us directly. Our knowledgeable advisors and trusted brokers will work with you to determine your objectives and screen and help select a provider that meets your needs.

Contact us through the following channels:

• Phone: (02) 9630 3142
• Email: [email protected]